During questioning by Riceland attorney Chris Hohne, Brothers laid out the stark differences in what the market for U.S. rice was in the European Union before the Aug.18, 2006 that a small amount of genetically modified (GMO) rice had been found in commercial shipments to the EU and after.
Before Aug. 18, 2006 U.S. rice had been “very successful” in the European market, Brothers testified. American rice was considered a “premium product” and was preferred over Asian rice because of its consistent quality.
All that changed after the announcement of the GMO incident. All commerce in rice with the EU stopped and barges that were in transit to Europe had to be brought back and the rice taken back to the mills for reprocessing, Brothers said. The bigger issue is that rice exports to the EU have never recovered. Hohne asked Brothers about a graph showing Riceland’s sales to the EU.
Sales dropped from 1,600,000 cwt. in 2005-06 to about 20,000 and since then have stayed “fairly consistent” at the lower level, Brothers said. Most of this rice goes to a customer in the U.K. which has a “little softer stance” on GMO material than the zero-tolerance policy in the rest of the EU, a policy which is still in effect.
Riceland had received assurance from Bayer representatives that the original Liberty Link rice project had been abandoned back in 2001 and the rice destroyed, Brothers said. When rumors surfaced about LL rice being grown in Arkansas in 2003, Riceland again received assurances from Bayer that there was no danger to the commercial rice crop.
But in January 2006, Riceland received a notice from a customer in France that a shipment of rice has tested positive for GMO. After discussions, “we concluded it had to be contamination from soybeans or another crop. There are other Liberty Link crops that have been approved for the commercial market. The customer was satisfied with this explanation, but insisted, “We try to get it cleaned up.” Then there was another positive test.
Riceland hired a Louisiana company, GeneScan, to do testing. GeneScan’s initial conclusion seemed to back up Riceland’s contention that it came from another crop. Brothers said that Riceland continued to investigate. Tests kept coming back positive for GMO material, so Riceland called Bayer in June.
Brothers said Bayer officials asked for additional samples and called back and said they had to talk to Riceland. The material in the rice was LL601, a product that Brothers said Bayer had supposedly given up on years before. This discovery had to be reported to the USDA. The call was made, and the USDA put a “gag order” on the parties.
Meanwhile, Brothers testified that Riceland continued to ship rice to the EU. Hohne asked Brothers if Riceland intentionally shipped contaminated rice to the EU.
Brothers denied this had happened, since Riceland did not know for a long time that the GMO material was actually in the rice. “I don’t see anywhere that we were hiding anything,” Brothers said. “We were trying to figure it out.” If Riceland made a premature announcement of a problem, “it could harm the industry.”
In his cross-examination, Bayer attorney John Hughes repeatedly returned to this point of Riceland continuing to ship rice after the initial complaints. Barges were even on the way in August right before the official announcement from the USDA, when Riceland was aware of the problem. He also asked several times if Riceland had started testing shipments. Brothers replied that they did not.
“We were not going to say anything until we knew what we had,” Brothers said any time Hughes asked him about why Riceland didn’t tell customers about the problem. As for stopping shipping, Brothers said the system for shipping rice to Europe is “like a pipeline,” with constant flow back and forth. If you stop it, “there are consequences. If we stop shipping to Europe, we have to say why.”
Hughes said that the large number of emails and letters introduced in evidence showed that Bayer was “keeping Riceland up to date.” However, Brothers called the problem a “failure of stewardship” on Bayer’s part.